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Standards fireworks

Recent statements that Origo has decided not to enter the mortgage standards market sound to me like a victory for common sense over ambition. It has already been identified by several mortgage players that significant volumes of new applications are already submitted electronically.

The electronic mortgage market is not the barren landscape that life and pensions were when Origo first published new business standards for that industry in May 1998.

That is not to say that there are not significant enhancements needed to electronic mortgage processes to deliver more cohesive transactions.

The mortgage industry is more likely to make progress by bringing together industry practitioners – both lenders and advisers – to agree the areas in need of urgent attention and then work with industry software suppliers to deliver pragmatic solutions.

This could bring business benefits in months rather imposing a standards strategy across the whole industry that could take years to deliver. A pragmatic approach will inevitably involve some mistakes being made and lessons being learned but the same is true of trying to build standards from scratch.

I am not saying that standards do not have a role to play but what has always concerned me about the way some organisations deliver standards is that constructing standards themselves appear to be treated as more important than delivering the business benefits they are supposed to provide. If you use the pragmatic approach, I believe you can deliver business benefits sooner and better standards in the long run.

To see this approach in practice, you need look no further than Positive Solutions, widely recognised as the adviser firm which has been most successful in its use of technology. It has repeatedly put in place practical solutions first and adopted standards later.

Origo’s standards process has repeatedly shown that it needs a considerable gestation period. The latest version of its new business standard seems to have the potential to deliver a truly straight-through process for new business submission, with significant use of pre-population from advisers’ systems. However, its first new business standard was delivered in 1998 so it has taken a long time to get there. Speed to market is hardly a phrase that comes to mind when you look at these timescales. I doubt that the mortgage industry would want to wait so long to address issues.

If we look at Origo’s new business tracking standard, the picture is no better. The first version was published in summer 2001 and yet, despite many subsequent iterations, we have yet to see any portal or client management system using this standard to deliver tracking updates to advisers.

There may be a temptation to say that what has been built for the life and pension market can just be adapted for mortgages but homeloans are an important part of the economy in their own right and deserve their own solution rather than being shoehorned into something built for the life insurance industry.

Part of the Origo mortgage standards debate has been about cost. Apparently, some lenders are concerned at the prospect of paying £10,000 a year for standards. I am sure that the Origo sponsors in the life and pension community would be delighted at the prospect of limiting their contribution to such a level. It is my understanding that the cost for even the smaller Origo sponsors is of the order of five times this level.

It would be interesting to know how many tens of millions have been sunk into Origo and with what real return.

Origo recently published a three-year roadmap for the development of life and pension standards. If Origo were to forgo the distraction of trying to move into the mortgage market, presumably such resources as might have been allocated to mortgage-related activity could be reassigned so that Origo will be able to deliver more promptly on many of the issues that still need to be addressed in the life and pension market.

If Origo were to deliver on the remaining life and pension standards within an accelerated timeframe, say, over 18 months, presumably upon completion of this exercise, this would make it possible to move the standards into maintenance mode with significant ongoing savings for Origo’s sponsors.

There is another major element of Origo strategy I find seriously worrying. Having decided that it does not want to continue to develop its own ISML standards language, Origo has decided that the XForms format should be the basis of standards developments for electronic forms. XForms is a standard supported by the World Wide Web Consortium (W3C) and is supported by many technology suppliers, including IBM, Sun and Novell. What concerns me is that there is one significant player which is not developing support for XForms – Microsoft.

Origo recently put an XForms prototype live on its website but XForms will not work with Microsoft Internet Explorer and Microsoft Office includes Microsoft’s alternative Infopath technology. Last week, Microsoft explicitly confirmed to me that it has no plans to develop native support for XForms for either the new versions of Internet Explorer or Microsoft Office.

Conceivably, third-party organisations might build some form of conversion or integration but Microsoft will not be doing so.

Technology in IFA offices is built virtually exclusively on Microsoft operating systems and the vast majority of IFA software applications are built using Microsoft tools so building industry standards around something that Microsoft have chosen not to support might have significant adverse implications for advisers.

While keen to see competing technologies in the market, given Microsoft’s success over the last two decades, I cannot help but wonder if there is a need to find a way to support the Microsoft solution as well as XForms. Betting the future of the life insurance e-commerce industry on Microsoft not succeeding seems to be a strategy with more risk than I would want to take.

Origo emerged in the 1980s, born out of the Campaign for Independent Advice which was established to counter the fear that the market would be dominated by tied agents in the then newly regulated market.

The industry was then a very different place and nearly all life companies were mutuals. Today, virtually all its sponsors are or shortly will be proprietary businesses with shareholders. When Origo was established, there was nothing like the pressure on margins or commission that are now a fact of life. Perhaps it is time for a complete review of the way in which Origo works or if it is even the right medium through which to operate industry standards.

Its apparent taste for betting the future of industry e-commerce on a solution that ignores the most widely used software provider for IFAs suggests to me that for the life and pension industry, such a review is possibly a matter of some urgency. As for the mortgage industry, in my view, it will be better looking for alternative ways to address its issues.

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